The US, China and India may take turns leading the global economy this century, according to an analysis by the Center for Economic and Business Research.
The CEBR forecast suggests that China could potentially take the top spot as the world’s largest economy by gross domestic product as early as 2037. The forecast also sees potentially strong growth in other countries such as India.
“In a ranking that is the largest economy in the world – which doesn’t take things like living standards into account. China is absolutely not catching up to the US on that scale,” said Nina Skero, CEO of CEBR. .
Economists believe that a large and rapidly growing GDP can signal a nation’s military strength, economic influence, and international importance.
“It would be naive to say it doesn’t matter,” said Mariana Mazzucato, a professor of economics at University College London. “But if we don’t address the biggest issues of our time around health, climate, digital technology and also artificial intelligence with a global lens, we won’t be better off.”
Policymakers around the world are spending large sums of public money to prepare for the social and environmental challenges that may lie ahead.
“I don’t want to restrict China. I just want to make sure that we have a relationship with China that is on the rise,” President Joe Biden said at a September 2023 press conference.
Leaders from India and China have strengthened their diplomatic ties with the US in 2023. Chinese President Xi Jinping, in particular, has sought to mend relations with Washington after a tumultuous start to the decade.
Business confidence in China is weakening, forcing the government to continue increasing its stimulus spending. China was previously expected to overtake the US economy by 2028, according to CEBR.
“The main problem facing China today is that the population, the private sector and investors do not have long-term confidence in the Chinese economy,” said Yasheng Huang, a professor of global economics and management at the MIT Sloan School of Management.
Population growth has stalled in China and the US in the 21st century, but India in particular may benefit from the so-called “demographic dividend”, where the working-age population grows in a well-capitalized business environment.
“The demographics (in India) are still very young compared to other big Asian economies like Japan, South Korea or China,” said Rajiv Biswas, chief Asia Pacific economist at S&P Global Market Intelligence. “This gives India the potential to grow at a fairly fast pace,” he told CNBC in an interview.
Follow up video above to learn more about the race for the world’s largest economy.